"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner

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China’s weekend releases of May economic data showed China’s economy, while struggling, may not be as weak as some of the more vocal ursus sinica claim. In China Data Signal Some Strength, Aaron Back of the Wall Street Journal/Dow Jones writes that:

China’s exports and imports both rose sharply in May, while inflation slowed substantially, hopeful signs for the world’s second-largest economy….A raft of data released over the weekend by the Chinese government present a mixed picture, but overall suggest an economy stronger than many market players feared at the end of last week. A surprise-interest rate cut by the central bank Thursday prompted speculation that the monthly data for May would be especially weak.

At least one financial news site outdid itself hyperventilating about the state of China’s economy. On June 8 Business Insider published You Don’t Have To Read Chinese To See Why This Chart Has Beijing Freaked Out in which the author inserted a chart of declining inflation and concluded that “that’s why China is panicking, and cut rates on Thursday morning.”

But on June 10 the same site and the same journalist published China Gives Markets Another Reason To Surge, writing that:

“Remember, going into the weekend, there was a big fear that because China announced a rate cut on Thursday, that we’d get a slew of really hard-landing-y data. But the data hasn’t been a disaster.”

I understand writing dramatic headlines to attract eyeballs, especially when building a startup financial news site, but do not expect to be taken seriously about a serious topic if you are almost hysterically schizophrenic.

John Hempton, who runs Bronte Capital, a small Australian fund (<50m USD I believe) that has made good money shorting and exposing Chinese stock frauds, is a very influential financial blogger. He is out with a blockbuster of a post about China. In The Macroeconomics of Chinese kleptocracy, Hempton declares that:

“China is a kleptocracy of a scale never seen before in human history. This post aims to explain how this wave of theft is financed, what makes it sustainable and what will make it fail. There are several China experts I have chatted with – and many of the ideas are not original. The synthesis however is mine.”

Hempton makes some serious charges but unfortunately does not name names. For example, he claims that:

“When given direct evidence of fraudulent accounts in the US filed by a large company with CPC family members as beneficiaries or management a big 4 audit firm will (possibly at the risk to their global franchise) sign the accounts knowing full well that they are fraudulent. The auditors (including and arguably especially the big four) are co-opted for the benefit of Chinese kleptocrats.”

China has a massive corruption problem, one that has gotten significantly worse since the 20 Trillion RMB or so (USD$3 Trillion+) in various fiscal and monetary stimuli launched in response to the 2008 global financial crisis. I would guess that somewhere between 10-30% of that stimulus was stolen through various forms of corruption. That said, I think Hempton overstates his case, though based on the comments his post is generating at his site and at Business Insider, it looks like I am in the minority. What do you all think?

The New York Times reviews a fascinating new exhibition in England, arguing that it rewrites the history of Han civilization in China:

“The Search for Immortality: Tomb Treasures of Han China” on view at the Fitzwilliam Museum through Nov. 11 is one of those landmark shows that shed new light on a crucial historical period in one of the world’s great civilizations….The discoveries made in the past three decades by Chinese archaeologists have yielded so much datable evidence that books dealing with Han China must be rewritten.”

If you can not make it to the museum, you can see parts the show in your web browser, at Virtual exhibition | Tomb Treasures of Han China.

Toxic food du jour is back. The Beijing News reports that some Shandong apple growers use pesticide bags to make their red Fuji apples grow bigger–烟台红富士套药袋长大_新京报网. But perhaps it is no big deal, as a Ministry of Agriculture official says there is nothing to fear in a little bit of pesticide residue–农业部官员：农药残留不可怕 低于标准可以食用_网易新闻中心? No more apples for my kids until we get back to DC for the summer…

In Ferraris push limit on road the China Daily reports that Hangzhou police stopped eight Ferraris racing on a highway Sunday. They were clocked going between 154-198 km/h, with one driver “setting a record on that road” with a top speed of 213 km/h. Three drivers were fined 200 RMB, five had their licenses revoked, and one, who did not have his license, had his car impounded. Perhaps we should start an asshole du jour entry as well….

The best way to see this blog is to subscribe by email, especially if you are in China, as Sinocism is still blocked here. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions are welcome, and feel free to forward to recommend to friends. Thanks for reading.

• 人民日报-中共中央直属机关党代表会议举行 选举产生出席党的十八大代表 令计划出席会议并讲话
• McDonald’s Sales Drop in Asia Signals Fast-Food Slowdown – Bloomberg
  lots of competition, some people realizing McDonad’s not healthy food//
  The chain’s division that includes Asia is “seeing challenging economic conditions, with slow growth in China,” Don Thompson, who will become chief executive officer in July, said during a first-quarter earnings conference call in April. Company-operated margin at restaurants in that region narrowed to 16.9 percent in the first quarter from 17.5 percent a year earlier.
  McDonald’s has tried to lure customers to its 1,500 stores in China with value lunch items and a new chicken burger.
  The company will start selling a value-priced dinner in China “in the coming months,” Thompson said in April.
• China Boosts Crude Imports to Record High as Prices Decline – Bloomberg
  China, the world’s second-biggest oil consumer, increased crude imports in May to a record high as refineries raised processing rates and oil prices declined.
  The country bought a net 25.3 million metric tons, or 5.98 million barrels a day, more than it exported last month, according to data published today on the website of the Beijing- based General Administration of Customs. That compares with the previous high of 5.87 million barrels a day in February.
• China emissions study suggests climate change could be faster than thought | Reuters
  China’s carbon emissions could be nearly 20 percent higher than previously thought, a new analysis of official Chinese data showed on Sunday, suggesting the pace of global climate change could be even faster than currently predicted.
• China has sovereignty over Huangyan Island-PRC Embassy In Manila Release on Web Site
  China has sovereignty over Huangyan Island
• 中国首名女宇航员候选人曝光(图)_网易新闻中心
  刘洋和王亚平, information released on China’s first 2 female astronaut candidates, Liu Yang and Wang Yaping. One may go into space this week
• Welcome to Bronte Capital | Bronte Capital is an Australian and USA licensed global fund manager
• Joseph F. Rock, Exhibition Invitation by Stephen Bulger Gallery
  Vintage Photographs from the National Geographic Image Collection
• 农业部官员：农药残留不可怕 低于标准可以食用_网易新闻中心
  Ministry of Agriculture official says there is nothing to fear in pesticide residue that is below the official safety standard.
• 烟台红富士套药袋长大_特别报道_新京报网
  Yantai, Shandong apple growers discovered using pesticide bags to make their red fuji apples grow bigger
• Pressure rises on banks’ earnings |Markets |chinadaily.com.cn
  Banking profits will be squeezed by the central bank’s benchmark interest rate cut and liberalization of the rate regime, analysts said.
  In the worst-case scenario, a narrowed deposit-loan rate spread will cut listed banks’ profits by 4 percent this year and 9 percent next year, China International Capital Corp Ltd, the nation’s biggest investment bank, said in a research note.Earnings growth next year will be single-digit, or even stagnant, if the central bank cuts the rate twice in the second half of this year, according to CICC.
• Ferraris push limit on road |Society |chinadaily.com.cn
  A senior traffic police officer in Hangzhou, Zhejiang province, said he was “appalled” by an incident on Saturday in which a fleet of luxury sports cars exceeded the speed limit by up to two times in the city.
  The city’s traffic police said it had stopped eight out of 34 Ferraris caught racing on Saturday on a highway linking Hangzhou, Xin’anjiang and Jingdezhen.
  The vehicles were heading from Shanghai for Zhejiang province to participate in a drag-racing event…
  According to speed trap records, these cars were traveling at speeds ranging from 154 to 198 kph…
  Police handed three owners 200 yuan fines each while confiscating the driving licenses of five others. One driver, who did not have his license, had his car taken from him instead.
• China’s Li Zhesi to miss London Olympics, says official – Xinhua | English.news.cn
  CHINADA announced Saturday that the 16-year-old Li was found positive for blood-boosting drug erythropoeitin, or EPO, in an out-of-competition test carried out on March 3
• More terracotta warriors discovered in NW China – Xinhua | English.news.cn
  The shield is an exciting discovery, because no shields had previously been found in the three pits of terracotta warriors, Yuan said.
• 11 dead, 59 injured in rear-end collisions in E China – Xinhua | English.news.cn
  dangerous highways here//
  Eleven people were killed and another 59 injured in several rear-end collisions on a section of expressway in east China’s Anhui province on Saturday night, rescuers said Sunday.
• China Data Signal Some Strength – WSJ.com
  China’s exports and imports both rose sharply in May, while inflation slowed substantially, hopeful signs for the world’s second-largest economy.
  A raft of data released over the weekend by the Chinese government present a mixed picture, but overall suggest an economy stronger than many market players feared at the end of last week. A surprise-interest rate cut by the central bank Thursday prompted speculation that the monthly data for May would be especially weak.
• Wang Xiangwei-Hunan chief needs to order inquiry into activist’s death | SCMP.com
  in Hong Kong, the popular anger over the suspicious death of Li Wangyang , one of the longest serving political prisoners, has threatened to overshadow an elaborate ceremony to mark the 15th anniversary of Hong Kong’s handover to mainland rule, and a change of the city’s government.
• Iranian bazaar beset by cheap Chinese goods: Shanghaiist
  “Western powers have stepped up its sanctions over Iran’s nuclear programme. As a result, Tehran’s been forced to expand trade agreements with traditional backers, such as export powerhouse China. The massive influx of inexpensive Chinese imports, however, is causing problems for local economies.”
• Telefonica to Sell Part of China Unicom Stake to Pay Down Debt – Bloomberg
  Telefonica SA (TEF) will sell almost half of its stake in China Unicom (Hong Kong) Ltd. for about 1.13 billion euros ($1.4 billion) as Spain’s biggest phone company seeks to reduce debt.
  Telefonica agreed to sell 1.07 billion shares, or a 4.56 percent stake, at HK$10.21 apiece to China United Network Communications Group, the Hong Kong-traded operator’s parent, the Madrid-based company said in a statement today. Pending regulatory approval, the deal is expected to close before July 31, it said.
• Chinese Airlines See Government Support on EU-Emissions Snub – Bloomberg
  Chinese airlines will snub a mid- June deadline for submitting carbon-emissions data to the European Union and anticipate that any fines or bans would be met with retaliatory measures.
  The China Air Transport Association “expects that the Chinese government will impose similar penalties on European airlines swiftly after any EU action,” Secretary General Wei Zhenzhong said today in an interview in Beijing. The group, whose members include China’s big three state-controlled carriers, hopes a trade dispute can be avoided, he said.
• Aston Martin Poised to Introduce Successor to Flagship DBS Cars – Bloomberg
  The company is selling between 20 and 30 vehicles a month in China, with the four-door Rapide being the most popular model, putting Aston Martin “head to head” with Ferrari and Lamborghini, said Matthew Bennett, regional director for Aston Martin in the Asia Pacific. The company participated in 14 auto shows in China in the first half of the year to promote its brand, he said.
• » Beijing’s Proliferating Graffiti Art Beijing Cream
• Can Zhang Dejiang bring Chongqing out of Bo Xilai’s shadow?｜Politics｜News｜WantChinaTimes.com
  Zhang Dejiang, the new party chief of the sprawling southwestern Chinese megacity of Chongqing, is busy clearing up problems left by his defenestrated predecessor Bo Xilai, reports our sister newspaper China Times.
• Bronte Capital: The Macroeconomics of Chinese kleptocracy
  Hempton a bit out of his depth on this one. I chatted with him last year about a very popular short stock. told him then he was wasting his time, he seemed to want to believe other “experts”. turns out on that name at least the experts have been very wrong so far//
  China is a kleptocracy of a scale never seen before in human history. This post aims to explain how  this wave of theft is financed, what makes it sustainable and what will make it fail. There are several China experts I have chatted with – and many of the ideas are not original. The synthesis however is mine. Some sources do not want to be quoted.
• Searching for Wildlife in Montana’s Bob Marshall Wilderness Complex – NYTimes.com
  wonder if rich Chinese tourists would be interested in this kind of a trip. Heard WildChina might be launching an outward facing service for rich Chinese who may be into these kinds of trips
• 重庆高调“挺私”|重庆|民营企业家|民营经济_21世纪网
  Chongqing Government makes push to support private enterprise in June 8 meeting and document. First high profile push for supporting private enterprise since 2007
• Amazon.com: People Who Eat Darkness: The Fate of Lucie Blackman (9780224079174): Richard Lloyd Parry: Books
• ‘People Who Eat Darkness,’ by Richard Lloyd Parry – NYTimes.com
  I opened this book as a skeptic. I am not a lover of true crime, and as a parent I recoiled from the lurid tale of a 21-year-old English bar hostess in Tokyo who was drugged and dismembered by a serial sex offender. But Richard Lloyd Parry’s remarkable examination of that crime, what it revealed about Japanese society and how it unsettled conventional notions of bereavement, elevates his book far above the genre. “People Who Eat Darkness” is a searing exploration of evil and trauma, and how both ultimately elude understanding or resolution.
• Veteran China graft lawyer to work for ousted Bo’s wife: sources – World news – Asia-Pacific – China – msnbc.com
  BEIJING (Reuters) – The family of Gu Kailai, the Chinese leader’s wife suspected of murdering a British man and igniting a political firestorm, has hired a Beijing lawyer experienced in defending officials accused of corruption to work for her, two sources have said.
  The sources, who have ties to Gu’s ousted husband, Bo Xilai, said her family hired Shen Zhigeng, a partner in the Beijing Zong Heng Law Firm, whose clients have included a former vice minister of public security jailed for taking bribes.
• Arts of Asia Back May-Jun 2012-Treasures of Han China
• Tomb Treasures of Han China | The Search for Immortality
• The Fitzwilliam Museum : Exhibitions & Displays
• Obama says clear rules needed to calm South China Sea | Reuters
  U.S. President Barack Obama called on Friday for clear rules to resolve maritime disputes in the South China Sea and throughout the Pacific
• China’s top banks hold deposit rates despite official cut | Reuters
  Banks have been forced for years to offer low rates, pushing savers into riskier investments such as property. The banks’ decision not to pass on Thursday’s cut is a sign that reform is releasing pent-up competition to win back deposits.
• China changes patent law in fight for cheaper drugs | Reuters
  China has overhauled parts of its intellectual property laws to allow its drug makers to make cheap copies of medicines still under patent protection in an initiative likely to unnerve foreign pharmaceutical companies.
• Beijing Payment Solicited From Las Vegas Sands – WSJ.com
  300m//
  The deal proposed to Las Vegas Sands was made in emails sent by attorney Leonel Alves, the company’s outside legal adviser. Las Vegas Sands hired Mr. Alves, a Macau legislator and a member of both the Chinese and Macau governments’ top political advisory bodies, to be a conduit to government officials, said people familiar with its Macau operations.
  Mr. Alves said in a text message that any claims that he suggested bribing government officials were “totally untrue,” and that “nothing had happened.”
• 南方周末 – 林彪内勤谈林彪与高岗
  Lin Biao staffer Wang Ruqin discusses Lin’s relationship with Gao Gang

The best way to see this blog is to subscribe by email, especially if you are in China, as Sinocism is still blocked here. The email signup page is here, outside the GFW. You can also follow me on @niubi or Sina Weibo @billbishop. Comments/tips/suggestions are welcome, and feel free to forward to recommend to friends. Thanks for reading.

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